Monday, June 18, 2007

Steps to get a Startup going

Most registered businesses out their are either sole proprietorship or 2-3 person partnership. So that's my intended audience for now.

The bleow steps are how I started my second business, after learning from my mistakes the first time.Step 1. Apply for an EIN with the IRS. You can do this here: http://www.irs.gov/businesses/small/article/0,,id=102767,00.html . The reason you should do this is so you can open business bank\credit accounts and start to build your business credit.

Step 2. Register your business with your state. For PA residents, you can do this here: http://www.paopen4business.state.pa.us I think its definitely worth creating a "single member" LLC, since its very easy to do your taxes this way and if your business seriously gets in gear, you are all set. LLC gives you full protection from loosing your shirt in a lawsuit. This will also register your business name with the state.

Step 3. Get a Business checking account and make sure you use your EIN when you sign up. This is important for when Dun & Bradstreet tries to create a credit profile for your business. A lot of larger businesses will do a credit check on your business and if you have no credit, it may be a deal breaker for that big govt contract. ;)

Step 4. After you've done the above you should start getting 0% Business credit card apps in the mail. I like Capital One for their nice online year-end summary statements. Which helps a lot for doing taxes.

Step 5. Get general liability insurance. To be even more protected, you can get $1mil in coverage for about $300/year, so you might as well go for it if you are providing services to other companies.

Step 6. Always use your business credit card\checking account to purchase things you want to deduct (ie. Dinners, gifts, computers, office equipment, etc.) This will allow you to easily manage all your deductions at year-end without having to spend a lot of time saving reciepts and keeping a running total of expenses throughout the year.

Step 7. When tax season comes around use www.turbotaxonline.com to do your personal and business taxes. They have a very simple process for single-member LLC, and saves me a ton of money each year. The cool thing is that you can setup an account for free and see how much your return is, before you spend a dime. Also, all the documents are stored on their website if you ever need them.

Some other things I have tried are registering with the local Chamber's of commerce, attending some business networking meeting, but none have really paid off that much for me. Probably because I haven't tried hard enough to utilize these resources. But I think the key to business is defintely networking, so if you have a great product\service, you're still gonna need to network like crazy and make yourself approachable. That's actually what makes you successful in any business and someday I hope to achieve that.Thanks for reading.

3 comments:

Solid advice. I like how you emphasize making use of your available resources. VC's don't come to you my friends! I wanted to add a link to Sun's Startup program that offers deep discounts to startups-- might be helpful for some of your readers-- www.sun.com/startup